From 'FOMO' To 'FOWT': Why Is Gen Z Hitting A Pause On Stocks?

Stock Market Investing: Gen Z were active participants in equity investing. Thanks to brokerage apps, a large section of working and non-working Gen Z investors parked whatever money they could into the stock market. In fact, after the Covid pandemic, India saw a sharp rise in retail investors, and Gen Z formed a major chunk of this surge. 

Between 2022 and early 2024, there was clear FOMO (fear of missing out) among Gen Z around equities and initial public offerings (IPOs). "There was a phase when I was very focused on investing in shares at the right time -- just like my friends. I used to keep a track of the IPOs as well," said Vatsala Nigam, a final-year BTech student. Follow Markets Live Updates

Stock market investing became a common topic of conversation on college campuses, in offices, and even at informal gatherings.

However, that FOMO has slowly turned into FOWT (fear of wrong timing). Over the last one and a half years, Indian equity benchmarks have underperformed. Since the Iran war began on February 28, markets have come under additional pressure.

"Who wants FOWT in life! The stock market 'hype' has phased out. My friends and I stopped investing after the markets turned 'hostile'. I would rather spend on cafe-hopping than losing money in the stock market," said Vatsala.

Many Gen Z investors agree with Vatsala. They feel this may not be the right time to enter the market, especially for those looking to book short-term profits. A large percentage of young investors did not enter the market with a long-term approach. Instead, they aimed to make a quick buck and rotate their returns into other stocks -- that was always the game. But the market dynamics have changed now.

Is It A Turning Point? What Experts Say

Market veterans don't see this behaviour as fear. They see it as a shift.

Dr Arindam Banerjee, Professor (Finance) and Director - Masters of Applied Finance & Wealth Management at SP Jain School of Global Management, says what looks like hesitation is actually maturity.

According to him, for the first time, Gen Z is approaching markets like professionals - with patience, structure and an understanding that protecting capital is as important as growing it.

But he also warns that caution without a roadmap can become paralysis.

He explains that delaying SIPs because of global uncertainty defeats the very logic of rupee cost averaging. Volatility is not the enemy of disciplined investors - it is the engine that makes long-term investing work.

What Gen Z needs now, he says, is structured financial education. The ability to understand risk profile, asset allocation, portfolio construction, and the difference between short-term noise and long-term signals. These are skills, not instincts.

Meanwhile, Harsha Vardhana VM, Founder & Group CEO of Atom Prive Wealth, points to data that clearly captures this mindset shift.

Younger investors now make up 54 per cent of first-time mutual fund investors in India. But they are taking 30-40 per cent longer to make their first investment decision compared to earlier years.

This is not rush. This is thought.

He says most of them are in their early 20s, earning monthly for the first time. SIP fits naturally into their salary cycle. Money comes every month, some money goes to investment every month.

And this habit is becoming powerful. Harsha says Gen Z has grown up watching markets swing wildly. They have learnt early that patience itself is a strategy.

The 'Small-Cap Trap' And The Finfluencer Noise

Mohit Bagdi, Head of Investment Research & Founding Member at MIRA Money, believes many young investors are stuck today because of what happened between 2020 and early 2024.

That phase, he says, felt like a cheat code. Everything was going up. Especially small-cap stocks. Many young investors mistook "being aggressive" for putting all their money into small-caps. Now that drawdowns have come, they are either booking losses in fear or sitting on losses hoping to recover.

This has created a decision paralysis - what should I do now? To make it worse, social media is full of contradictory advice -- Buy the dip. Market crash. Multibagger. Exit now. 

Too much noise. No direction.

He says equity markets often go through phases where they make investors feel disgusted about investing. This is normal. This is the nature of markets. Wealth is planted in such times, not during bull runs.

But if young investors pause SIPs now, they lose the most important ingredient of early investing - compounding during critical years.

His advice is simple: be aggressive in staying invested, but only through diversified portfolios across large, mid, small caps and fixed income. And most importantly, filter the noise or take help of an advisor.

Waiting For The 'Perfect Time' Is Costing More Than Losses

Aditya Agrawal, Chief Investment Officer at Avisa Wealth Creators, says Gen Z today is hyper-aware.

They consume too much information. They want the perfect entry point. And in trying to avoid wrong timing, they end up not investing at all.

He also points out a trust gap. Traditional tools like SIPs, RDs and FDs look slow and outdated to many young investors. Equities look risky. Lifestyle spending and side hustles look more attractive.

This overthinking, he says, is silently more damaging than imperfect timing.

Investing 101: From Hype To Homework

The stock market is no longer a campus conversation starter like it was in 2022. Now, it is a subject people are quietly observing.

Gen Z are trying to understand it better before stepping in again. And experts believe this phase - uncomfortable, confusing, slow - may actually be the phase where real investors are being built.

FOMO made them enter the market. FOWT might finally teach them how to stay in it.